Monday August 22,2011 : $38 million lottery contract with Intralot may come under scrutiny
Calls for an investigation into the award of a $38 million lottery contract to Intralot surfaced over the weekend in an op-ed article in the Washington Post written by columnist Colbert King.
Revealing that the District's former attorney general, Peter Nickles, had recommended that an enquiry be carried out, King asked Washington DC Inspector General Charles J. Willoughby for confirmation, only to be handed off by the comment: “We don’t confirm or deny that an investigation is underway.”
"But I concluded from reading between the lines of our conversation that Willoughby is pursuing the July 2010 request by the city’s then-attorney general, Peter Nickles, for an investigation of the D.C. Council’s involvement in the award of the city’s $38 million lottery contract," King writes.
The columnist goes on to speculate that such an investigation could "penetrate the veil of secrecy" cloaking the council’s passage of a law legalising intrastate online gambling (see previous InfoPowa report) and determine the extent to which – if at all – political connections and cronyism have led to "waste and abuse in the lottery procurement process."
King observes: "One thing’s for sure: It’s all about the money," before elaborating on the rules concerning the award of the District's lucrative lottery business.
The procurement laws give preferential treatment to certified local, small and disadvantaged businesses, and frequently such companies lack the expertise or equipment to operate lottery systems.
This necessitates partnering with outside companies that do have the know-how and resources, and once established the "local partner" can leave operational matters in the hands of the experts.
However, questions can arise on how the partners in such a joint venture were brought together, and the degree of political facilitation and reward that this may entail.
"Case in point: Intralot, the Greek gambling company that was awarded the lottery contract in December 2009," King writes.
"Ward 8 council member Marion Barry told Jeffrey Anderson of the Washington Times in July 2010 that he let Intralot know it needed to take on a local partner if it wanted the council to approve the pact.
“Barry, according to the Times, said: “I sent word that the contract was DOA without a local partner.”
"Continuing, Barry said, “I saw an opportunity for a reputable, substantial black businessman to get into the lottery business.”
"Barry was speaking of Emmanuel S. Bailey, whose local firm, Veterans Services Corp., got a majority stake in the $38 million contract."
Intralot has denied any impropriety in the deal.
The reference to online gambling stems from concerns that the passage of the legalization bill, attached to a supplementary budget measure, was not preceded by proper public consultations and information campaigns, and questions regarding the relationship between the Council member who introduced the bill and a Washington DC lobbying firm.
Implementation of the e-gaming law has since been placed on the back-burner subject to a full public information and consultation exercise to be carried out by the DC Lottery.